Ford, Nissan to Invest $3B in UK Green Car Projects

A heaping pile of pounds will be injected into Britain’s green car industry over the coming years, with automakers and the government both throwing cash into a major buildout of manufacturing capacity for lithium-ion batteries, fuel-efficient engines and other parts for lower-emission vehicles. Japanese automaker Nissan announced today that it plans to invest 420 million pounds (about $642 million) into expanding its plant in Sunderland, UK, to produce the upcoming LEAF electric sedan as well as lithium-ion batteries for vehicles from both it and alliance partner Renault.

Also today, Ford Motor said its European division will pour 1.5 billion pounds into lower-emission vehicle technologies at its four UK facilities over the next five years. The Detroit automaker will also receive a 360 million-pound loan guarantee from the UK government.

Today’s announcements come at a time when the level of investment and capacity planned for lithium-ion batteries over the next few years has some analysts forecasting a looming glut. Given the number of companies planning to break ground this year on new lithium-ion battery manufacturing facilities (see our map of the U.S. green car battery buildout), or expand existing facilities, John Gartner of Pike Research has told us that he expects we could start to see excess capacity starting in 2012. “How much of this capacity is actually used, that’s an open question,” he said in a recent interview, but supply could outpace demand by 2012 as well.

“Our technology is such that we’re on our second, third, fourth generation of hybrid vehicles already,” Ford CEO Alan Mulally explained at an event in San Francisco last summer. Plug-in hybrids are next up, he said, although “the really compelling vision is, of course, the all-electric vehicle,” including the planned electric Ford Focus. “Considerably further out,” Ford still expects its investments in hydrogen vehicle technology to pay off.

For Nissan’s Sunderland project, a portion of the 420 million total investment will come from the UK government, through a 20.7 million-pound grant and a proposed finance package for up to 197.3 million pounds.

Both automakers have also won major government backing for similar projects stateside. In June, the Department of Energy announced a $1.6 billion loan award to help Nissan North America retool its Smyrna, Tenn. factory to build electric cars and batteries, and a whopping $5.9 billion in loans toward Ford’s retooling of factories in five states to produce 13 “more fuel-efficient models.”

Nissan’s plan calls for production of the LEAF to begin in Oppama, Japan, this year, and for the Smyrna plant to come online in 2012. The automaker says today that the LEAF model will start rolling off the Sunderland assembly lines in 2013, with initial production capacity of some 50,000 units per year, while battery production at the Sunderland facility will come online in 2012 and have an annual production capacity of 60,000 units. Nissan expects to launch U.S. sales of the LEAF in late 2010 and UK sales in early 2011.